The Flavor Factor Fuels Beer

As we put the finishing touches on our 2013 State of the Industry report, the first in our Trends in Adult Beverage series for this year, I’m realizing 2012 was indeed a weird year in beer. In fact, I’d call it a tipping point of sorts.

Yes, the beer industry as a whole turned the corner after a few years of decline, and volume grew. But the growth in the beer market broke with the longstanding trend of the major domestic brands serving as the driving force. In fact, given the economic landscape, the growth drivers are somewhat counterintuitive: the most expensive beer categories outperformed the industry as a whole.

Beer was undoubtedly impacted by the recession; the core beer consumer was among those hardest hit by layoffs and other economic pressures. No doubt they changed their purchase frequency and spend in both on- and off-premise channels, and the major mainstream domestic brand portfolios lost overall volume (although Coors Banquet and Coors Light made gains).

While the economic improvements did result in some stabilization for the mainstream domestic beer categories in the form of slowing rates of decline, it was the more expensive, flavorful and stylistically diverse categories that realized the true benefits of the recovery. As confidence lifted, consumers loosened their grip on their wallets enough to resume or expand their exploration of beer in all its expressions, whether indulging in an imported selection at the bar, picking up a six-pack of a new craft label or seasonal at the supermarket, or taking home a growler of cider from a convenience store. In fact, the gains made by the imported, craft, super-premium domestic and cider categories added a combined 35.7 million cases to the market in 2012, and we foresee those trends accelerating this year.

The bottom line is that the beer landscape looks markedly different as 2013 gets underway, and flavor now is the overall driving force. No doubt, the major mainstream brands still deliver the bulk of beer volume, and selections in both on- and off-premise outlets should reflect the importance of those brands to the bottom line. But the flavor factor is changing the game at all levels. The smallest categories are proving mighty, and the consumer is voting with their taste buds.

A veteran of the foodservice industry, Donna Hood Crecca leads the firm’s Convenience Store Practice and is active in its Adult Beverage Practice. She develops research-based insights and recommendations for leading and emerging supplier and operator companies to enhance their go-to-market and product development programs and strategies.

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